This article was contributed by Steve DiEugenio, General Manager at Glassbox, as part of Tearsheet’s new Thought Leaders contributor program.

Amazon isn’t a company to stand still. Jeff Bezos didn’t go from selling books in his garage to being the richest man on Earth without having his fingers in more than a couple of pies. Whether it‘s the unveiling of Prime Video in direct competition to streaming giant Netflix, or the more recent extension into brick and mortar storefronts, Amazon has continually extended itself into new industries outside the realms of online retail. So when it was revealed earlier this year that Amazon was in talks to provide its own current account service that could challenge the big banks, it shouldn’t have been unexpected.

The news sent shivers down bankers’ spines – and for good reason. No longer will people have to make payments via traditional means: non-banks can authorize payments and essentially rob banks of their payment revenue as long as customers agree to their terms. More importantly though, banks will be denied the customer data they so heavily rely on for risk management purposes amongst others. Should Amazon indeed make the leap into this sector, banks could quickly see themselves becoming unprofitable cash runners whilst Amazon and any other optimistic challengers enjoy lucrative financial benefits. But how does the retail giant know customers will flock to their offering over the experience and infrastructure of the real banks? How Amazon will succeed in these developments can be attributed to one thing in particular: their consideration for Customer Experience Management (CEM).

What is CEM?

While banks have spent the last decade primarily focused on their digital transformation, many have missed the crucial importance of monitoring customers’ online journey and UX. By embracing modern technologies to ensure the customer experience is smooth and services are amenable, companies like Amazon are excelling in this area with a perfectly crafted platform that delivers endless sales. So what is CEM exactly?

CEM means understanding exactly what happens during your customer’s lifecycle and using that information to generate a better service. Today, software can be employed that monitors every facet of that lifecycle and go much further than traditional online touchpoints ever could. Knowing what device a customer uses, how long they spend on each page, and the location they access it from are just some of the ways that can inform improvement. Not only that, by addressing areas where customers abandon their journey or struggle to progress due to technical issues or a confusing interface, such intelligence can be reported back to the proprietor in real time and progressive change implemented thereafter.

Why Amazon has the edge

Amazon has already proven its capabilities in the UX space. A/B testing and continuous development has meant the site and mobile application’s UX is always improving. Bank payment systems remain clunky, but by integrating payment into preferred platforms managed by companies which already have the capability to produce unrivalled UX, for customers the choice is clear. Amazon also already naturally attracts digital talent where banks don’t. Supported with big investment to boot, the company’s capability to increase its user base is only growing exponentially.

On top of that, they already have the necessary customer data. Online users have and continue to share data with businesses like the GAFAMs because they typically get a desirable value exchange. Most customers are happy to surrender personal details if it means they can receive a valuable service as a result. Post PSD2, big tech companies like Amazon now have even more access to data as banks are forced to give up their once monopolized customer information to third parties. Meanwhile, the business currently has major ongoing engagement with their customers – including its 100 million Prime subscribers – and is likely to hold favorable marketing preferences going forward.

What can banks do?

Banks cannot afford to stick their heads in the sand when it comes to understanding how to keep customers engaged in the digital world. By the time that banks catch up on digital transformation, they’ll be far behind their non-bank competitors, such as Amazon, on CEM. The time to focus in on that challenge is now. In today’s digital age, customer experience is more important than ever.

There are three fundamental principles to delivering an effective customer experience: observation of the customer journey via touchpoints, reshaping customer interactions, and rewiring the company’s services to align with customer expectations. It’s only through advanced digital analytics and AI technology that organisations can understand what is going through their customers’ minds. These are powerful tools that can be harnessed to remove barriers and deliver web and mobile app experiences that are responsive to a customer’s needs. Mapping out customers’ digital journeys from the moment they visit a website, or an app, is imperative in an environment where users expect faultless digital platforms. This all goes to the heart of improving conversion in the digital customer journey.